Every homeowner would love to improve their home every once in a while not only to maintain and add appeal to it but even to add home value. However, not everyone has enough budget to finance a home improvement project. Thankfully, there are lots of option to choose from.
The following are 6 financing alternatives that can help you pay for your home improvement projects.
Saving up enough cash takes time and patience. However, it is easier to set and stay within a budget if you know you’re going to pay with cash. With the right attitude, you can dodge extra fees that come with debts in financing your home’s renovation.
Your trusty old credit card can cover for your renovations when you have no money to finance it. Such payment option comes with interest fees that are usually higher than mortgages. If you miss or pay late, you can lose lots of cash. But, if you’re after rewards or credit points and you’re confident you can pay for your bill at the end of the project, then credit cards may come in handy to achieve your goal.
Good read: The Pros and Cons of Credit Cards
If you’re not comfortable with putting your home as collateral, then personal loans are a great financing alternative when improving your house. It takes five to seven years to pay for a personal loan, and interest rates are usually higher than home equity loans. This is perfect for homeowners with good credit scores but doesn’t have enough equity to qualify for Home Equity Loans.
Home Equity Loan
If you want to fund home improvement projects by tapping into your equity, then a Home equity loan is one way to do it. You’ll receive a lump sum of money that you can pay for it within 15 to 30 years. These are some Texas Home Equity Loan Rules to follow if you want to make the most out of your home equity.
- Understand Home Equity tax rules
- Compare pros and cons before settling on a lender
- Only use your home equity for good reasons
- Make sure to only borrow less than 80% of your home’s value
- Plan a payback wisely
Home Equity Line of Credit
When it comes to HELOCs, your lender will deposit the funds on your account that you can withdraw anytime you need to use it. Like a home equity loan, you can borrow up to 80% of your home’s equity. When it is time to pay back the loan, monthly payments are usually higher since it will only last for 15 years and already comes with more principal fees.
For homeowners who used a home loan to finance a home purchase, you can lower your monthly payments and rate with the help of a mortgage refinance. After your lender is done appraising your home, the remainder will be the amount you can cash out to use for home improvement. It would be best not to cash out all equity and to shop for a good lender if you plan on changing your first mortgage lender. Also, watch out for hidden costs and fees to avoid higher monthly payments.
Your dream home remodeling projects can come true with the help of these 6 financing options. Our advice to think about your options and their pros and cons, don’t rush when making a decision and to research and compare rates before signing a deal with a mortgage lender.